Data on personal income isn’t as healthy as it looks

My studies take me all over Indiana with frequent trips into the Data Dungeon. Today I saw Per Capita Personal Income (called PCPI by her friends) alone and sobbing. Passers-by don’t recognize her despite her popularity and stunning figure.

“What’s up, kid?” I said to the sad fraction with the growing numerator and the pleasing denominator.

“Politicians, economic developers and PR people keep talking about me and they don’t have the faintest idea who I am,” she said.

“You know the score,” I told her. “People don’t bother examining both numerators and denominators. In your case, they don’t care how personal income grows in your upper parts as long as it does so faster than the population in lower reaches.”

“All those eyes on me all the time,” she was clearly disgusted. “Don’t they care how and why I’m changing? All they want is my figure to look spiffy without recognizing what I go through.”

“Everywhere people think your growth is a sign of well-being. They don’t know it might be the result of declining population,” I said. “Falling population helped 47 of Indiana’s 92 counties to have growing PCPI between 2005 and 2015. Jay County, with a 2.2 percent decline in population, led the state with a 55 percent growth in PCPI.”

She fought back the tears. “They don’t understand my expanding upper torso isn’t a sign of health. It’s occurring because Medicare, Medicaid, Social Security, food stamps, unemployment compensations and other transfer payments by government accounted for 29 percent of the increase in Indiana’s personal income over the past decade.”

“Right,” I agreed. “And what are transfers except money to help people who are elderly, sick, disabled, poor, or out of work? That kind of growth is not a sign of a healthy economy.”

“It’s awful,” she sighs. “We’ve had Hoosier governors tell us they will use me as a metric to assess the success of their programs. Counties make false claims about me. I’m going to have a reputation my family back at the U.S. Bureau of Economic Analysis (BEA) will find shocking … passed around from one ignorant booster to another….”

“Lots of data,” I said, “Good kids like you want to tell an honest story, but are denied the opportunity because the national or state legislature won’t allocate the money needed to let you do your job. You end up with imputations, numbers stuck onto you, adhering by only the skinniest assumptions.”

“I’d feel better,” she said, “if I could shake off $20 billion imputed as income in rent and interest payments to Hoosiers. Imagine thinking the rental value of your home, or interest credited to some account in your name, are really income! It’s phantom money that makes me feel unclean.”